Decoding property terms: your guide to getting it right
When it comes to buying or selling a property, the language used can sometimes feel like a whole new world. From legal terms to financial jargon, understanding property terminology is key to making informed decisions. If you’ve ever found yourself scratching your head at industry terms or feeling overwhelmed by the terminology, this property jargon buster will help you navigate the process with confidence.

1. EPC (Energy Performance Certificate)
An EPC gives you an overview of a property’s energy efficiency. It’s rated from A (very efficient) to G (inefficient), with higher ratings meaning lower energy costs and a better environmental impact. Buyers should consider EPC ratings when deciding on properties, as higher-rated homes tend to be cheaper to run.

2. Chain
A chain refers to a sequence of transactions in property sales. For example, if you’re buying a home, the sale might be part of a chain of buyers and sellers all linked together. A chain-free property means there are no other buyers or sellers involved, which can speed up the process.

3. Mortgage in Principle (MIP)
A mortgage in principle is a statement from a lender that says you are likely to be approved for a mortgage up to a certain amount, based on your income and credit history. It’s useful when house hunting, as it shows sellers you are serious and financially capable of making a purchase.

4. Conveyancing
Conveyancing is the legal process of transferring property ownership from the seller to the buyer. This involves a series of legal checks, including searches on the property’s history and ensuring all paperwork is in order. Conveyancers or solicitors manage this process.

5. Exchange of Contracts
When you exchange contracts, the sale becomes legally binding. At this point, the buyer and seller sign an agreement to complete the transaction, and the buyer typically pays a deposit (usually 10% of the purchase price). Once exchanged, neither party can back out without financial penalties.

6. Completion
Completion is when the property officially changes hands. It’s the final step in the sale process, where the balance of the purchase price is paid, and the buyer receives the keys to their new home. It usually happens a few weeks after the exchange of contracts.

7. Freehold vs Leasehold
Freehold means you own the property and the land it sits on outright.
Leasehold means you own the property for a set period (often 99 or 125 years), but the land it sits on is owned by a separate party (usually a freeholder). Leasehold properties often have additional costs, like ground rent and maintenance fees.

8. Survey
A survey is a professional inspection of a property to assess its condition. There are different types of surveys:

• Homebuyer’s Report: A basic survey that highlights any obvious problems.
• Building Survey: A more thorough inspection for older or larger properties.
• Valuation Survey: Usually carried out by a mortgage lender to determine if the property is worth the loan amount.

9. Stamp Duty
Stamp Duty Land Tax (SDLT) is a tax paid when buying property in England. The amount you pay depends on the property price and whether you are a first-time buyer. First-time buyers get a tax break on properties up to £425,000, while buyers of second homes or higher-priced properties will pay more.

10. Asking Price vs Offer Price
The asking price is the amount the seller is asking for the property. The offer price is the amount you propose to pay for it. You can negotiate your offer based on factors like the property’s condition or how long it’s been on the market.

11. Closing Costs
Closing costs refer to the additional fees involved in completing the purchase of a home. These can include stamp duty, legal fees, survey costs, and other administrative charges that buyers need to account for on top of the property’s purchase price.

12. Deposit
The deposit is the money you put down upfront when buying a home, typically between 5% and 20% of the property price. The larger the deposit, the more likely you are to receive a better mortgage rate.

13. Buy-to-Let
A buy-to-let is a property purchased with the intention of renting it out to tenants. The income generated from renting the property should ideally cover the mortgage repayments, and any profit is considered an investment.

14. Bridging Loan
A bridging loan is a short-term loan used to “bridge the gap” between buying and selling. It’s often used if you need to secure a property before selling your current home or if you’re waiting for long-term financing.

15. Capital Gains Tax
Capital Gains Tax (CGT) is a tax on the profit you make when selling an asset, such as property. If you sell a second home or investment property, the profit made on the sale may be subject to CGT. It’s important to factor this into your calculations if you’re selling.

Mastering the lingo
While property terminology can seem confusing, understanding the key terms is the first step in making smart, informed decisions. Whether you’re buying, selling, or investing, knowledge of the jargon will help you navigate the property market with confidence.

Ready to explore the property market? Get in touch today to learn more and feel confident with every step you take.